Are concerts bum deal for Orlando?

City defends payments to promoters

In the past three years, Orlando has paid more than $1.8million to concert promoters to entice them to bring shows to the Amway Arena, records show.

The city's 48 "co-promote" payments range from about $2,500 for a Ricky Martin concert to $112,000 for a Bruce Springsteen show. An additional seven payments went to the same promoters who booked shows into the Bob Carr Performing Arts Centre.

Sometimes, the payments are so large that top-tier concerts brought surprisingly little profit for the city, according to records reviewed by the Orlando Sentinel.

For instance, when Britney Spears brought her comeback tour to the publicly owned arena two months ago, the city made $7,147 -- after paying promoter AEG Live more than $97,000. The Springsteen concert netted the city just $9,325.

Even so, city officials defend the practice as a cost of doing business, saying concerts would bypass Orlando if the incentive weren't offered here.

"If a promoter can get this deal in Jacksonville or Tampa, where's his incentive to bring a show to Orlando?" venues director Allen Johnson said.

The arrangement provides a rare window into the world of deal-making between promoters for some of the world's biggest bands and the venues where they play. As record sales have plummeted because of the impact of online music sales and illegal downloads, revenue from concert tours has become increasingly important for musicians. The same goes for their promoters.

A proliferation of venues also has made it easier for artists to skip cities that once had been mainstays.

"In the old days, there weren't that many sandboxes to play in. You could say, 'I'm the only venue in South Florida, and you're going to pay me X amount or you're not going to play here.' Now, there's a venue every 30 miles," Johnson said.

Those changes prompted private venues to begin sharing more revenue with concert promoters about 10 years ago, according to Gary Bongiovanni, editor-in-chief of the industry magazine Pollstar.

Publicly owned venues are following suit.

In most places, these financial arrangements are invisible to the public, because most venues are privately owned or managed. That's not the case in Orlando -- home to one of the few publicly owned and managed National Basketball Association arenas -- where finances are subject to Florida's open-records laws.

Here's how a standard deal works: A promoter pays the artist and covers expenses such as advertising and insurance. In exchange for rent that ranges from $27,000 to $55,000, the city provides a venue; police and fire protection; private security; ushers and ticket-takers; traffic control; cleanup; and miscellaneous other services.

The promoter makes money from ticket sales, and the city makes money from the rental payment, concessions, merchandise, parking, a $1-per-ticket facility fee and a Ticketmaster rebate.

Before late 2006, both sides kept all of their respective revenues and covered their own expenses.

Now, under the "co-promote" arrangement, the city's total revenues -- before expenses -- and the promoter's profit are added together, and the promoter takes 40percent of the total.

"It's all about trying to attract business in a highly competitive market," Bongiovanni said. "Increasingly, there are more civic buildings that are stepping up and taking some risk, as well, and it's working for their bottom line."

Even so, the city's payment can sometimes far exceed its profits, especially at big shows. Those generate lots of concession and other revenues for the city -- on which the "co-promote" payment is based -- but also result in higher expenses for extra ushers and security that eat into the city's bottom line.

"If they didn't bring the show here, there would be zero revenue," Johnson said.